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Pay developments - 2002

Observatory: EurWORK

Topic:

Collective bargaining,

Relaciones laborales,

Salario e ingresos,

Date of Publication: 10 Marzo 2003

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This review of broad trends in pay in 2001 and 2002 finds that average collectively agreed nominal wage increases across the EU and Norway fell from 3.8% in 2001 to 3.5% in 2002 - though with major variations between countries. This downturn ended an upward trend observed since 1999, suggesting that pay moderation has been renewed or strengthened in some countries. Taking into account inflation, the rate of real increase actually rose a little from 2001 to 2002, but fell slightly if only the EU (excluding Norway) is considered. In sectoral terms, the average increase in 2001 was 3.6% in both retail and chemicals, with the central civil service some way behind at 3.2% . In 2002, the average increase remained stable in retail and the civil service, but fell back to 3.4% in chemicals. We also include data on three candidate countries (Hungary, Poland and Slovakia), where pay increases at present are generally considerably higher than in the EU.

Across the European Union, 2002 was generally a year when economic growth slowed, unemployment rose and inflation crept upwards. Unsurprisingly in this context, pay - and especially calls for wage moderation - maintained and even strengthened its central importance in industrial relations. Furthermore, wage developments were in the spotlight more than ever in 2002, as it was the year when EU Economic and Monetary Union (EMU) entered a new stage with the introduction of euro notes and coins in the 12 'euro-zone' countries. The progress of EMU means that the focus on pay as a means of adapting to economic imbalances is increasing, as euro-zone countries are no longer able to use exchange and interest rates to make such economic adjustments. Moreover, within EMU, wage developments are a key factor in whether or not the EU economy is heading in an inflationary or deflationary direction. The introduction of the euro has also added greater transparency to pay comparisons within Europe.

Since the start of stage two of EMU in 1994, the European Commission and the Council of the European Union have adopted annual Broad Economic Policy Guidelines (BEPGs), which include recommendations on what they see as 'appropriate wage developments' within the euro-zone. The 2002 Recommendations on the broad guidelines of the economic policies of the Member States and the Community state that over recent years sustained wage moderation has allowed employment to increase significantly and unemployment to fall without resulting in a boost to inflation. In this light, the 2002 BEPGs recommend that:

Wage developments in Member States should reflect different economic and employment situations. Governments should promote the right framework conditions for wage negotiations by social partners. For wage developments to contribute to an employment-friendly policy mix, social partners should continue to pursue a responsible course and conclude wage agreements in Member States in line with the general principles set out in the broad economic policy guidelines. It is necessary that:

The stress on linking pay developments with labour market conditions in the final recommendation is arguably rather stronger in the 2002 guidelines than in previous years. Otherwise the wage recommendations remained unchanged. Elsewhere in the BEPGs, Member States are called on to address the underlying factors that lead to the existence of a gender pay gap.

The crucial role afforded in 2002 to wage moderation by EU institutions and governments was illustrated by the President of the European Central Bank (ECB), Willem Duisenberg, in July 2002 in a speech presenting the ECB's annual report. He stated: 'In order to maintain price stability, it is crucial that wage moderation prevails in the future. In this respect, we are concerned about recent trends in wages. The importance of wage developments in line with our definition of price stability cannot be overemphasised. Wage moderation is a key factor in favouring the expansion of employment and in helping to create the conditions for a sustainable increase in the potential growth rate of the euro area economy.'

These concerns about a possible end to the EU's period of general wage moderation reflected signs that the overall rate of nominal pay increase in many countries rose steadily - if usually slowly - from 1999 to 2001 (TN0202102U), suggesting that moderation was coming under sustained pressure in some countries (this was especially the case in the euro-zone in 2001). Calls for renewed or maintained wage moderation were made in many EU Member States in 2002, mainly by governments and employers, and the issue was at or near the top of the industrial relations agenda in some countries (such as Belgium, Finland, Germany, the Netherlands and Spain).

In this context, the aim of this annual report (or update) from the European Industrial Relations Observatory (EIRO), based on contributions from its national centres, is to provide a broad, general indication of trends in pay increases over 2001 and 2002 within the EU Member States (plus Norway). For the first time, we also include some data for three of the candidate countries which are to join the EU in 2004 - Hungary, Poland and Slovakia.

We do not attempt to produce a fully scientific and comparable set of pay comparisons, given that EIRO is not a statistical service and that pay is an area where meaningful international comparisons are especially difficult. Differing national systems of pay formation, industrial relations, taxation and social security, and the divergent ways in which pay-related statistics are collected and presented, mean that comparisons between countries are hard to draw. Nevertheless, given the key importance of pay, we provide these general indications of recent developments while pointing out the problems, caveats and qualifications. The figures provided should be treated with extreme caution, and the various notes and explanations read with care.

Average collectively agreed pay increases

Collective bargaining plays a key role in pay setting in all the countries considered here. However, the nature of this role differs widely between the countries, with different bargaining levels (intersectoral, sectoral, company etc) playing different parts, and bargaining coverage varying considerably. Furthermore, the importance of bargaining differs considerably between sectors of the economy and groups of workers. Overall bargaining coverage rates range from over 90% in Austria, Belgium, France and Sweden to under 40% in Hungary, Poland and the UK. Nevertheless, 70% of employees or more are covered by collective bargaining in the great majority of countries examined here (TN0212102S).

Figure 1 below provides figures for average nominal collectively agreed basic pay increases in each country (or a broadly equivalent indicator, where these are not available). Where possible, the figures cover the whole economy, though there are exceptions (see the notes below the figure). Data are not yet available for the whole of 2002 in a number of cases. Variations in the 2001 figures from those appearing in the EIRO pay update for 2001 (TN0202102U) are explained mainly by the replacement of provisional or partial figures with more reliable ones, plus in some cases changes in the data used, where more appropriate sources have been identified - as with France. (In this and subsequent figures, the data are sorted in order of increase [highest to lowest] for 2002. Where there is no 2002 figure, the country is ranked by its 2001 figure in comparison with the 2002 figures for the other countries.)

The large differences in national pay formation and industrial relations systems are illustrated by the varying ways in which the increases referred to in figure 1 are arrived at. Free collective bargaining, primarily (though not wholly in all cases) at sectoral level, plays the main role in Austria, Denmark, France, Germany, Italy, the Netherlands, Norway, Portugal, Spain and Sweden. National intersectoral agreements are responsible for setting the relevant increases, or laying down guidelines for lower-level bargaining in Belgium, Finland, Greece and Ireland (plus Spain in 2002). In the UK, it is company-level bargaining (or bargaining at lower levels within the company) that is predominant, as is the case in Hungary. Automatic pay indexation represents a significant proportion of the increases in Belgium and Luxembourg. The role of the increases referred to in the figure also differs: in countries such as Austria, Denmark and Italy, the increases referred to are sectoral minima, subject to subsequent lower-level bargaining (or in the case of Austria, the application of actual pay increases agreed at sector level); while in countries such as the UK, the figures are more likely to represent actual increases.

Putting aside these and other caveats, the following points emerge from figure 1. First we consider the 15 EU Member States and Norway (no 2002 data are yet available for France).

In 2001, nominal pay increases varied between 7.5% in Ireland (the limit laid down by a national agreement) and 2.1% in Germany. Increases of 4% and over were recorded in five countries, increases of 3%-4% in seven countries, and increases of 2%-3% in four countries. The average increase stood at 3.8%.

In 2002, nominal pay increases varied between 5.5% in Norway (though this figure is for total pay increases and includes more than general collectively agreed increases) and 2.1% in Austria (though this refers only to sectoral minima, rather than actual pay increases). Increases of 4% and over were recorded in four countries, increases of 3%-4% in six countries and increases of 2%-3% in five countries. The average increase stood at 3.5%.

The average increase thus fell by 0.3 percentage points from 2001 to 2002. This reversed an upward trend seen since 1999, when the average increase stood at 2.9% (having fallen from 3.1% in 1998), rising to 3.2% in 2000 and 3.8% in 2001. The outcomes of pay bargaining in 2002 might thus be seen as expressing a trend toward greater moderation, though the average increase of 3.5% is still the second highest since 1998.

There still seems to be relatively little convergence between the rates of nominal pay increase in the various European Economic Area (EEA) countries considered, with wide variations persisting between them in 2002 - though the range between the highest and lowest increases was considerably less than in 2001. Averaging the annual increases over the five-year period 1998-2002, the 16 countries can arguably be divided into: 'low' nominal pay-increase countries - those where pay increases have averaged 2%-3% (Austria, Denmark, Finland, France, Germany and Italy); 'medium' nominal pay-increase countries - those where pay increases have averaged 3%-4% (Belgium, the Netherlands, Portugal, Spain, Sweden and the UK); and 'high' nominal pay-increase countries - those where pay increases have averaged over 4% (Greece, Ireland, Luxembourg and Norway).

There are also divergent trends in pay increases in the various countries. While the average increase fell from 2001 to 2002 in eight countries (with pay moderation appearing most evident in Ireland, Portugal, Finland, the Netherlands and the UK), following the overall downward trend, the rate of increase rose in five countries (most notably Greece and Germany) and remained stable in two. Looking at the five-year period starting in 1998, the average overall trend - for increases to fall from 1998 to 1999, then rise over 2000 and 2001 before dropping off in 2002 - has been mirrored to varying extents in Austria, Belgium, Finland, Ireland, Luxembourg, the Netherlands and the UK. Only Spain has seen a continuous rise, while Sweden is alone in maintaining virtual stability. Germany has for most of the period followed an opposite trend to the average. Otherwise, few countries have displayed a clear trend in nominal pay increases, with most varying up and down from year to year. In terms of the size of the variations in annual increases over 1998-2002, it seems that the countries with the greatest stability are Sweden, Austria, Italy, Luxembourg and the UK (in all cases the variation between the highest and lowest annual increases is lower than 1 percentage point), while the least stable are Ireland, Greece and the Netherlands.

Taking only the 12 countries of the euro-zone, the following picture emerges.

In 2001, nominal pay increases varied between 7.5% in Ireland and 2.1% in Germany. Increases of 4% and over were recorded in four countries, increases of 3%-4% in five countries and increases of 2%-3% in three countries. The average increase stood at 3.9%.

In 2002, nominal pay increases varied between 5.4% in Greece (the increase in minimum rates set by a national agreement) and 2.1% in Austria. Three countries recorded increases of 4% and over, while increases of 3%-4% were recorded in four countries and increases of 2%-3% in four countries. The average increase stood at 3.5%.

These figures indicate that the average nominal pay increases in the euro countries in 2001 was slightly higher (by 0.1 point) than in the EU/EEA more widely, while the rate of increase was the same in the two groups of countries in 2002. There was no overall difference between the two groups of countries in terms of the general downward average trend from 2001 to 2002, though four out of five countries that bucked this downward trend were in the euro-zone

For the first time, this year we include three EU candidate countries in our analysis, with data for Hungary (2002 only), Poland and Slovakia. In all cases apart from Poland in 2002, nominal pay increases were considerably higher than the EU/EEA average, with the candidate countries average exceeding 6% in both years. Including the three countries in the overall averages would increase the latter by some 0.3-0.4 percentage points, suggesting that the EU's average nominal increases will rise somewhat when the new Member States join in 2004. Poland experienced a sharp fall in pay increases from 2001 to 2002, while Slovakia experienced a slight decrease. Hungary's increase of 10% in 2002 was the highest in any country examined.

* Average of 18 countries; ** Average of 16 countries for 2001 and average of 15 countries for 2002; *** Average of 12 countries for 2001 and average of 11 countries for 2002

Source: EIRO.

The statistics in figure 1 should be read in conjunction with the following notes.

Austria: 2001 figure from Statistik Austria index of agreed minimum wages; 2002 figure is an EIRO estimate based on the provisions of most important collective agreements.

Belgium: figures cover blue-collar workers only (equivalent figures for white-collar workers were 3.2% in 2001 and 2.9% in 2002); figures represent total of collectively agreed pay increases (1.3% in 2001 and 1.5% in 2002), plus automatic pay indexation and effects of reduction of working time; figures, from Ministry of Labour and Employment, are for years to September.

Denmark: no general figures available, and figures used relate to the key industry sector agreement, which operates the 'minimum-wage' system, whereby sectoral agreements set only minimum rates, with subsequent local bargaining producing further increases; the figure for 2001 represents the increase from March 2001 and the 2002 figure the increase from March 2002.

Greece: figures refer to increases in minimum rates as set out in 2000-1 and 2002-3 National General Collective Agreements.

Hungary: figure is weighted average of increases in company collective agreements - EIRO calculation based on Ministry of Employment and Labour database.

Ireland: the 2001 figure represents the second-phase payment of 5.5% for both private and public sectors under the Programme for Prosperity and Fairness (PPF) national pay agreement for April 2001-March 2002, plus an additional 2% awarded from April 2001, following revision of the PPF, to compensate workers for high inflation; the 2002 figure represents the third-phase (final) payment of 4% for both private and public sectors under the PPF, plus a 1% lump sum under the revised PPF to compensate workers for high inflation - the third phase applied up to 31 December 2002 in the private sector and 30 June 2003 in the public sector.

Norway: there are no reliable figures on collectively agreed basic pay increases for all employees; the figures given, from the Technical Calculation Committee for Income Settlements (Teknisk Beregningsutvalg, TBU), represent total annual pay increases (including wage drift and 'carryover' effects from previous years).

Poland: figures, from the Central Statistical Office (GUS), refer to increases in average pay in the national economy; 2002 figure for year to end of third quarter.

Portugal: figures from Ministry of Labour and Solidarity's Department of Labour, Employment and Vocational Training Statistics (Departamento de Estatística do Trabalho, Emprego e Formação Profissional, DETEFP); figure for 2002 relates to the year to September.

Slovakia: figures are EIRO estimates.

Spain: 2001 figure, from Ministry of Labour and Social Affairs (MTAS) labour statistics publications, includes the effect of inflation-linked pay revision clauses (3.5% without such revisions); 2002 figure is an estimate, based on the increase foreseen in the intersectoral agreement providing guidelines for bargaining in 2002 - ie 2% (forecast inflation rate), plus 1.9% representing estimated gap between forecast and real inflation.

Sweden: no figures available for average collectively agreed pay increases, and figures represent an estimate based on the three-year agreements concluded in spring 2001 bargaining round, including 0.5% as estimated effect of working time reduction in each year.

UK: figures from Labour Research Department (LRD) Bargaining Report 232 November 2002; data is median of agreements, unweighted by workers covered; 2002 figures are for the 12 months to October 2002.

Real pay increases

Figure 1 above refers to nominal pay increases. To produce an indication of real pay increases, figure 2 below adjusts the increases for inflation, subtracting the annual average rates of inflation for December 2000-December 2001 and December 2001-December 2002 respectively, as calculated in line with Eurostat's Harmonised Index of Consumer Prices (HICP). Similar inflation figures are not available for the candidate countries, so they are omitted from this part of the analysis. For the EU 15 as a whole, 2001 saw inflation fall after several years of increases, from an average of 2.4% over December 2000-December 2001 to an average of 2.1% over December 2001-December 2002 (this measure provides a useful indicator of inflation over the whole year, though it does not show the rise in inflation which occurred in late 2002). As figure 2 shows, despite the slight fall, inflation continued to erode nominal pay increases across the EU and Norway.

* Average of 16 countries for 2001 and average of 15 countries for 2002; ** Average of 12 countries for 2001 and average of 11 countries for 2002

Source: EIRO.

Figure 2 indicates the following trends.

The workers concerned received real pay increases in 10 countries in 2001, but in six countries (Greece, Germany, Italy, the Netherlands, Portugal and Spain) they saw their nominal pay increase swallowed up by inflation (although in some cases, the pay increase figures used represent minima, built on by subsequent bargaining). In 2002, the number of countries where inflation outstripped the nominal pay rise fell to four (Denmark, Italy, the Netherlands and Portugal). Only in Italy the Netherlands and Portugal did workers lose out in both years.

In 2001, the range of real pay increases was between 3.5% in Ireland and -0.7% in the Netherlands - a slightly smaller range than found for nominal increases. Increases of 2% and over were recorded in five countries, increases of 1%-2% in one country, increases of under 1% in four countries, a zero increase in one country and decreases of up to -1% in five countries. There thus appeared to be something of a split between five countries with relatively high (2% plus) real increases, and 10 countries covered by increases in the range of between 1% and -1%. The average increase stood at 0.8%.

In 2002, the range of real pay increases was between 4.7% in Norway (though again it should be noted that this figure is for total pay increases and includes more than general collectively agreed increases) and -0.6% in Portugal - a rather wider range than found for nominal increases (though this is due solely to the high increase recorded in Norway). One country recorded an increase of over 4%, two countries recorded an increase of 2%-3%, four countries recorded increases of 1%-2%, four recorded increases of 0%-1% and one had a zero increase, while there were decreases of up to -1% in three countries. There was thus rather more convergence than in 2001, if Norway is excluded. The average increase stood at 1.0% (but only 0.7% without Norway).

The average increase thus rose by 0.2 percentage points from 2001 to 2002, compared with a fall of 0.3 points in nominal pay. However, in the EU only (excluding Norway), the rate of increase in real pay fell by 0.1 points. This followed a rise of 0.3 points between 2000 and 2001, which had been preceded by a fall of 0.9 points between 1999 and 2000 and an unchanged rate between 1998 and 1999. The brief upward surge in 2001 has thus been reversed in the EU, though the decrease is only very slight - but maintained when Norway is added. The small average fall in real pay increases in the EU in 2002 disguises the fact that the rate of real pay increase rose in eight countries and fell in only five. Over the five-year period 1998-2002, there are few discernible trends in real pay increases across the countries considered. In terms of the size of the variations in annual increases over 1998-2002 - which tend to be considerably larger than for nominal pay increases - it seems that the countries with the greatest stability are Denmark, France and the UK (in all cases the variation between the highest and lowest annual increases is lower than 1 percentage point), while the least stable are Germany, Ireland and Norway.

Averaging the annual real pay increases over the four-year period 1999-2002, the 16 countries can arguably be divided into: 'negative' real pay-increase countries - those where pay increases have averaged below zero (Italy); 'low' real pay-increase countries - those where pay increases have averaged under 1% (Austria, Denmark, Finland, France, the Netherlands, Portugal and Spain); 'medium' real pay-increase countries - those where pay increases have averaged 1%-2% (Belgium, Germany, Greece, Ireland, Luxembourg and Sweden); and 'high' real pay-increase countries - those where pay increases have averaged 2% or over (Norway and the UK).

Taking only the countries of the euro-zone, the following points can be made.

In 2001, real pay increases varied between 3.5% in Greece and -0.7% in the Netherlands. Increases of 2% and over were recorded in three countries, increases of 1%-2% in one country, increases of under 1% in two countries, a zero increase in one country and decreases of up to -1% in five countries. The average increase stood at 0.7% - slightly lower than the overall EU/EEA average of 0.8%.

In 2002, real pay increases varied between 2.2% in Luxembourg and -0.6% in Portugal. Increases of 2% and over were recorded in two countries, increases of 1%-2% in two countries and increases of under 1% in four countries. Decreases of up to -1% were recorded in three countries. The average increase stood at 0.7%, somewhat below the overall EU/EEA average of 1.0%.

These figures indicate that in 2001 and 2002 (as over 1998-2000) real pay increases were lower in the euro countries than in the EU/EEA more widely. Real pay increases in the euro-zone remained stable between 2001 and 2002, while rising slightly in the EU/EEA more widely. All of the countries which experienced a decrease in real pay in both 2001 and 2002 were in the euro-zone. All but one of the 'negative' and 'low' real pay-increase countries over 1998-2002 are in the euro-zone, while both of the 'high' real pay-increase countries are outside it.

Use of distributive margin

In recent years, some trade unions have taken an increasing interest in the extent to which collective bargaining outcomes use up the 'distributive margin' of the total sum of inflation and productivity growth. For example, the 'Doorn group' of trade unions from Belgium, Germany, Luxembourg and the Netherlands (DE9810278F) have agreed to seek 'collective bargaining settlements that correspond to the sum total of the evolution of prices and the increase in labour productivity', and they assess each year the extent to which they have used up this full 'distributive margin'. It is accounted a success for trade unions if pay rises equal or exceed the total of the increase in inflation and productivity.

There are many methodological and statistical difficulties in comparing pay developments in this way and that bargaining has other non-pay outcomes which can be difficult to calculate in terms of their cost effects. However, this measure does provide a useful indication in evaluating bargaining outcomes, as it takes into account productivity as well as inflation, and other European bargaining coordination efforts by trade unions take a similar approach. For example, the European Trade Union Confederation (ETUC) has adopted a coordination guideline which includes a pay claims formula whereby 'nominal wage increases should at least exceed inflation, while maximising the proportion of productivity allocated to the rise in gross wages in order to secure a better balance between profits and wages' (EU0101291N). A sector-level example is the European Metalworkers' Federation (EMF) 'European coordination rule' whereby 'the key point of reference and criterion for trade union wage policy in all countries must be to offset the rate of inflation and to ensure that workers' incomes retain a balanced participation in productivity gains' (EU0108241F).

Table 1 below assesses pay bargaining outcomes in 2001 and 2002 in the light of the distributive margin formula. It should be treated with extreme care, given the often disparate, partial and hard-to-compare nature of the statistics, and the notes should be read carefully.

Table 1 indicates that trade unions across Europe have continued to face difficulties in achieving bargaining settlements that use up the full distribution margin. Figures are available for 13 of the countries over the whole 2001-2 period, and these show an average total shortfall of 0.7 percentage points between pay rises and the sum of inflation and productivity increases. The gap remained narrowed from 0.5 points in 2001 to 0.2 points in 2002 (though the latter figure includes fewer countries). This compares with gaps of 2.4 points in 2000 and 0.7 points in 1999, so it represents an appreciable move closer to achieving the unions' target. Figures are available for 2001 for the four countries where unions operate the 'Doorn formula', and on average they exceeded the distribution margin by 0.05 points. Figures are available for 2002 for Belgium, Germany and Luxembourg, and again they exceed the target - this time by an average of 0.8 points.

Over the full two-year period, bargaining outcomes in Belgium, Ireland, Italy, Luxembourg, Norway and the UK managed to exceed the distributive margin, by as much as 2.8 points in the case of Luxembourg. The biggest shortfalls were registered in Greece, Denmark, Portugal and Sweden. In 2001, six countries met or exceeded the margin, while six also did so in 2002.

Overall, the figures suggest that nominal pay increases moderated somewhat in 2002 following a rise in 2001. Taking inflation into account, real pay increases had not risen very high in 2001, despite worries about an erosion of wage restraint, and this moderation strengthened slightly in 2002 in the EU, when real increases were half the level they had been in 1998 and 1999 (however, high real pay increases in 2002 Norway meant a slight rise in the overall EU/EEA rise). Adding productivity into the equation, unions experienced greater success in achieving wage rises equal to the sum of inflation and productivity increases in 2001 and especially 2002 than in previous years. However, there was still a shortfall on average and in the great majority of countries. The evidence suggests that the EU's key broad economic guidelines on pay - that increases in nominal wages should be consistent with price stability and that increases in real wages should not exceed growth in labour productivity - are largely being observed in most Member States.

Collectively agreed pay increases by sector

Turning from the whole economy to individual sectors, we provide figures below for collectively agreed pay increases in sectors selected to represent manufacturing industry (chemicals), services (retail), and the public sector (the central civil service). While these more specific figures are probably more accurate than the overall average increases given in the previous section, extreme caution is again advised in their use, and the notes under each table should be read carefully.

Factors which should be borne in mind when comparing the sectoral pay increase figures, often reflecting differences in national industrial relations systems, include the following:

the figures have been arrived at in a number of ways - usually the basic increase provided for in the most recent relevant sectoral agreement, but also in some cases through producing an average of a number of settlements at company level (eg the UK, or Dutch chemicals and retail);

the definitions of sectors, and the structure of sectoral bargaining, vary considerably from country to country, so it is not always sure that like is being compared with exact like;

the extent to which actual pay reflects the collectively agreed increases referred to varies, with bonuses and additional payments of various sorts featuring more strongly in some countries than others;

pay rises are not always fully consolidated, with the use of one-off payments featuring in cases such as Germany and Austrian chemicals;

automatic pay indexation may account for a considerable part of the pay increases recorded (as in Belgium and Luxembourg);

the relative roles of sectoral and company bargaining are again an important factor, with the sectoral agreements referred to in countries like France, Italy and Denmark providing only for minima, with subsequent lower-level bargaining;

the dates when the various collective agreements, and the relevant pay increases, come into force vary considerably and rarely run from the beginning of the calendar year;

in some countries, multi-year agreements apply (as in Belgium, Denmark, Finland, Ireland, Italy and Sweden) with the pay increases not always being paid in equal tranches, distorting the annual figures;

only one category of workers may be referred to in the tables where bargaining occurs separately for blue- and white-collar workers (as in Belgium); and

in the civil service, the increases referred to in the tables are in some cases not bargaining outcomes but imposed by governmental order (as in Slovakia), though often following consultation (as in Portugal).

Comparing the three sectors, in 2001, the average nominal increase across the EU and Norway stood at 3.6% in both chemicals and retail and 3.2% in the central civil service (the whole-economy average was 3.8%). In 2002, the average increase in chemicals fell to 3.4% (slightly below the whole-economy average of 3.5%) and remained stable in both retail - at 3.6% slightly above the whole-economy average - and the civil service - at 3.2%, below the whole economy average. Over the four-year period 1999-2002, the average annual increase stood at 3.3% in both chemicals and retail and 3.0% in the civil service. It might be expected that pay increases in the civil service would be pushed downwards by the increased pressure on public sector finances owing to the EMU convergence criteria, and the fact that this sector has had the lowest overall pay increases since 1999 may support such a view. However, civil service pay increases seem to have been less liable to large year-on-year fluctuations.

Sectoral data are available for two candidate countries - Hungary and Slovakia. In all three sectors, agreed pay increases were far above the average for EU and Norway, though they generally followed the overall downward trend between 2001 and 2002.

Chemicals

In 2001, the range of nominal pay increases awarded in the chemicals sector across the EU and Norway was between 7.5% in Ireland and 1.2% in France - see figure 3 below. In 2002, the range of increases narrowed, with the highest pay rise being found in Greece, at 5.8%, and the lowest in Austria, at 1.3% (no 2002 data are yet available for France and Norway, while the relevant collective agreements in Belgium provided only for cash increases in 2002, which cannot be expressed in percentage terms). The average pay increase fell slightly from 3.6% in 2001 - slightly below the whole-economy average figures (see figure 1 above) - to 3.4% in 2002 - the same level as the whole-economy average. The rate of increase fell between 2001 and 2002 in eight countries, rose in four and remained unchanged in one..

In 2001, the increase in chemicals was equal to the national average increase for all sectors in four countries, higher in five countries (most notably in Belgium and the Netherlands) and lower in seven countries (most notably in France and Italy). In 2002, the increase in chemicals was equal to the national average increase for all sectors in three countries, higher in seven countries (most notably in Spain and Portugal) and lower in three countries (most notably in Austria).

The average increases of 3.6% in 2001 and 3.4% in 2002 compare with increases of 3.0% in both 1999 and 2000. Over the four-year period 1999-2002, the average annual increase in chemicals was: under 1% in France; 2%-3% in Austria, Denmark, Finland, Germany, Italy and Spain; 3%-4% in Portugal, Sweden and the UK; 4%-5% in Greece, Luxembourg and the Netherlands; and over 5% in Ireland.

With regard to the candidate countries, figures are available for Hungary and Slovakia. In both cases, agreed pay increases in chemicals in 2001 and 2002 were far above the average for the EU Member States and Norway, and higher than in any of these countries. Hungary had the highest increases of any country examined in both years, though the rate of increase fell between 2001 and 2002. The rate of increase was stable in Slovakia.

* Average of 18 countries for 2001 and average of 15 countries for 2002; ** Average of 16 countries for 2001 and average of 13 countries for 2002

Source: EIRO.

The figures in figure 3 should be read in conjunction with the following notes.

Austria: figures relate to sectoral collective agreements; increases applied from January 2001 and November 2002 respectively; one-off flat-rate payment of EUR 50 also awarded in 2002.

Belgium: 2001 figure refers to white-collar workers and includes 4% automatic pay indexation, plus a 1% pay increase applicable from March 2001; agreements generally do not provide for percentage increases, but a cash rise - white-collar workers received a monthly increase of EUR 12.39 from January 2002, and blue-collar workers an hourly increase of EUR 0.1239 from January 2002 and EUR 0.0744 from March 2001 (there was no indexation payment for either blue- or white-collar workers in 2002).

Denmark: figures relate to the industry sector agreement, which operates the 'minimum-wage' system, whereby sectoral agreements set only minimum rates, with subsequent local bargaining producing further increases; the figure for 2001 represents the increase from March 2001 and the 2002 figure the increase from March 2002.

Germany: figures, from the WSI collective agreement archive, apply to west Germany only; figures refer only to increases in basic pay and exclude flat-rate payments and special bonuses; the 2001 figure relates to sectoral agreement applying from June 2001 to February 2002 and the 2002 figure to sectoral agreement applying from April 2002 to March 2003.

Greece: figures from Greek Federation of Workers in Chemicals; 2001 figure relates to agreement applying from January 2001, and 2002 figure to agreement applying from January 2002; 2002 figure made up of 1.3% applicable from January 2002 as a 'corrective sum' for 2001, plus 2.5% from January 2002 and 2% from July 2002.

Ireland: the 2001 figure represents the second-phase payment of 5.5% under the Programme for Prosperity and Fairness (PPF) national pay agreement for April 2001-March 2002, plus an additional 2% awarded from April 2001, following revision of the PPF, to compensate workers for high inflation; the 2002 figure represents the third-phase (final) payment of 4% under the PPF, plus a 1% lump sum under the revised PPF to compensate workers for high inflation - the third phase applied up to 31 December 2002 in the private sector.

Italy: figures from Istat monthly pay index; 2001 figure is half of 2.3% increase from December 2000 to December 2001; 2002 figure is half of 5.5% increase from January 2002 to December 2003.

Luxembourg: figures from relevant collective agreements; the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from April 2001); the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from June 2002).

Netherlands: figures are average of a sample of relevant collective agreements.

Slovakia: figure is mid range of increases set out in relevant sectoral collective agreements.

Spain: figures, from MTAS, refer to chemicals sector collective agreement and include the effect of inflation-linked pay revision clause.

Sweden: figures refer to 38-month chemicals sector collective agreement signed in 2001, which provided for an overall 7% wage rise over 38 months, and include effects of working time reduction (an extra 1.5% in total); 2001 figure refers to both blue- and white-collar workers; 2002 figure refers to blue-collar workers only (1.9% for white-collar workers).

UK: figures for median increase in lowest basic rates in 'chemicals and minerals' from LRD Bargaining Report, September 2001 and September 2002; they represent an average of agreements, unweighted for numbers of employees covered.

Retail

The range of nominal pay increases in the retail sector in the EU and Norway in 2001 was between 7.5% in Ireland and 2.5% in Denmark - see figure 4 below (no data are available for either 2001 or 2002 for France, while the relevant collective agreement in Belgium provided for cash increases in 2002, which cannot be expressed in percentage terms). In 2002, the range of increases narrowed very slightly, with Norway heading the list at 6.2% (though this figure includes more than collectively agreed increases) and Austria bringing up the rear with 1.8% . The average remained stable at 3.6% between 2001 and 2002, with the rate of increase rising in five countries, falling in seven and remaining stable in two. Retail pay increases were slightly below the whole-economy average in 2001, and slightly above it in 2002.

In 2001, the increase in retail was equal to the national average increase for all sectors in one country, higher in eight countries (most notably in Italy and Norway) and lower in six countries (most notably in Luxembourg and the Netherlands). In 2002, the increase in retail was equal to the national average increase for all sectors in four countries, higher in six countries (most notably in Sweden and Italy) and lower in four countries (most notably in Luxembourg).

The average increases of 3.6% in both 2001 and 2002 compare with increases of 2.8% in 1999 and 3.0% in 2000. Over the four-year period 1999-2002, the average annual increase in retail was: 2%-3% in Austria, Denmark, Finland, Germany, Italy and the UK; 3%-4% in Luxembourg, the Netherlands, Portugal, Spain and Sweden; 4%-5% in Greece; and over 5% in Ireland and Norway.

With regard to the candidate countries, figures are available for Hungary and Slovakia. In both cases, agreed pay increases in retail in 2001 and 2002 were far above the average for the EU Member States and Norway. Hungary had the highest increases of any country examined in both years, though the rate of increase fell between 2001 and 2002. The rate of increase fell sharply in Slovakia, to the extent that it was overtaken by several current Member States.

Belgium: figures refer to agreement for supermarkets; 2001 figure includes 4% automatic pay indexation only, with no other agreed increase; no percentage increase in 2002, but a monthly cash increase of EUR 12.5 from June 2002, plus an indexation payment of 2%.

Denmark: figures relate to basic agreed increase in minimum monthly pay for unskilled workers under retail sector agreement; the figure for 2001 represents the increase from March 2001 and the 2002 figure the increase from March 2002.

Germany: figures, from WSI collective agreement archive, refer only to increases in basic pay and exclude flat-rate payments and special bonuses; 2001 figure refers to 'pilot' retail agreement in Hamburg region, applicable from May 2001; 2002 figure refers to pilot retail agreement in Baden-Württemberg region, applicable from August 2002.

Greece: figures from the Greek Federation of Private Employees; 2001 figure includes increases of 2% from January and 1.8% from July; 2002 figure includes increases of 3% from January and 2.9% from July.

Ireland: the 2001 figure represents the second-phase payment of 5.5% under the Programme for Prosperity and Fairness (PPF) national pay agreement for April 2001-March 2002, plus an additional 2% awarded from April 2001, following revision of the PPF, to compensate workers for high inflation; the 2002 figure represents the third-phase (final) payment of 4% under the PPF, plus a 1% lump sum under the revised PPF to compensate workers for high inflation - the third phase applied up to 31 December 2002 in the private sector.

Italy: figures from Istat monthly pay index; 2001 and 2002 figures each represent half of a 6.2% increase between January 2001 and January 2003.

Luxembourg: the figures are EIRO estimates; the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from April 2001); the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from June 2002).

Netherlands: figures are average of a sample of relevant collective agreements.

Slovakia: figure is based on relevant sectoral collective agreements and includes tourism.

Spain: 2001 figure, from MTAS, refers to 'retail and repairs' and includes the effect of inflation-linked pay revision clauses; 2002 figure is an estimate, based on the increase foreseen in the intersectoral agreement providing guidelines for bargaining in 2002 - ie 2% (forecast inflation rate), plus 1.9% representing estimated gap between forecast and real inflation.

UK: figures for median increase in lowest basic rates in 'retail, distribution and hotels' from LRD Bargaining Report, September 2001 and September 2002; they represent an average of agreements, unweighted for numbers of employees covered.

Civil service

There was a very wide range of nominal pay increases in the central civil service sector in the EU and Norway in 2001, from 7.5% in Ireland to 1.0% in France - see figure 5 below (no 2002 data are available for Finland, Italy and Spain). In 2002, the range of increases narrowed somewhat, with Greece heading the list at 5.8% and Austria at the bottom with 0.8% (a figure that should be adjusted retrospectively to inflation, though this is currently a matter of dispute). The average increase remained stable at 3.2% between 2001 and 2002, with the rate of increase rising in seven countries, falling in five and remaining stable in one. Civil service pay increases were below the whole-economy average in both years, but the gap fell from 0.6 percentage points in 2001 to 0.3 points in 2002.

In 2001, the increase in the civil service was equal to the national average increase for all sectors in two countries, higher in two countries (Denmark and Greece) and lower in 12 countries (most notably in the Belgium, France and Spain). In 2002, the increase in the civil service was equal to the national average increase for all sectors in two countries, higher in two countries (again Denmark and Greece) and lower in nine countries (most notably in Belgium and the Netherlands).

The average increases of 3.2% in both 2001 and 2002 compare with increases of 2.7% in 1999 and 3.0% in 2000. Over the four-year period 1999-2002, the average annual increase in the civil service was: under 1% in France; 1%-2% in Austria and Italy; 2%-3% in Belgium, Finland, Germany, Spain and Sweden; 3%-4% in Denmark, Greece, the Netherlands, Portugal and the UK; 4%-5% in Luxembourg and Norway; and over 6% in Ireland.

Turning to the candidate countries, figures are available for Hungary and Slovakia. In both cases, pay increases in the civil service in 2001 and 2002 were far above the average for the EU Member States and Norway. Hungary had the highest increase of any country in 2001, though the rate of increase dropped sharply in 2002. Slovakia had the highest increase of any country in 2001, which was nearly double the 2001 figure.

* Average of 18 countries for 2001 and average of 15 countries for 2002; ** Average of 16 countries for 2001 and average of 13 countries for 2002

Source: EIRO.

The figures in figure 5 should be read in conjunction with the following notes.

Austria: figures refer to 2001-2 agreement between Union of Public Employees (GÖD) and government; 2002 figure should be adjusted retrospectively to inflation, but this is currently a matter of dispute.

Belgium: figures refer to 2% automatic indexation only in both years, with no other agreed increase in either 2001 or 2002.

Denmark: figures from the State Employer's Authority (Personalestyrelsen).

Finland: figure is from Statistics Finland.

France: figures represents the annual change in basic monthly remuneration for civil servants (according to the ACEMO survey); the 2002 figure is for the year to September.

Germany: figures, from WSI collective agreement archive, refer to the collective agreement for non-civil servant public sector staff - civil servants' pay increases are determined by law, but usually in line with the public sector agreement; figures refer only to increases in basic pay and exclude flat-rate payments and special bonuses; the 2001 figure refers to an increase applicable from August 2000 to August 2001; and the 2002 figure to an increase applicable from September 2001 to October 2002.

Greece: figures from Bank of Greece.

Ireland: the 2001 figure represents the second-phase payment of 5.5% under the Programme for Prosperity and Fairness (PPF) national pay agreement for April 2001-March 2002, plus an additional 2% awarded from April 2001, following revision of the PPF, to compensate workers for high inflation; the 2002 figure represents the third-phase (final) payment of 4% under the PPF, plus a 1% lump sum under the revised PPF to compensate workers for high inflation - the third phase applied up to 30 June 2003 in the public sector.

Italy: figure from Istat monthly pay index; 2001 figure represents a quarter of a 7.4% increase between January 1998 and December 2001.

Luxembourg: the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from April 2001); the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from June 2002).

UK: central civil service settlements vary as there are some 173 separate bargaining groups and different pay mechanisms, including performance-related pay; figures provided represent an unweighted average of settlements - reported in LRD Bargaining Report, September 2001 and September 2002 - for Inland Revenue Service (58,000 staff), Home Office (10,000), Department of Trade and Industry (6,000) and, in 2002 only, Department of Health (4,500); the 2001 increases of 2.5% and 3% for the Home Office and Department of Trade and Industry could rise to 3.3% and 5% respectively with location and skills allowances.

Average earnings

The above analysis examines collectively agreed pay increases, based mainly on the contents of agreements. A clearer indication of the actual development of workers' incomes is provided by earnings figures, usually based on a survey of individuals' earnings and including elements such as bonuses and overtime pay. Figure 6 below provides data on increases in average earnings in 2001 and 2002 (though figures are not available for 2002 for Finland and Portugal, or for either year in the cases of Austria - and some 2002 figures are partial).

Once again, extreme caution is advised and the notes below the table should be read closely. The nature of the statistics and the definitions of earnings vary considerably from country to country, and in some cases (such as Belgium), the figures cover only particular groups of workers.

In the EU and Norway, the range of average earnings increases in 2001 was between 9.0% in Ireland and 1.9% in Germany, while in 2002 the extremes were Greece, at 7.0%, and again Germany, at 1.7%. The average rate of increase across the countries examined fell from 4.3% in 2001 to 4.1% in 2002 (though the latter average is based on a smaller number of countries), thus ending an upward trend from 1998 to 2001 (the average stood at 3.1% in 1998, 3.5% in 1999 and 3.9% in 2000). This appears to confirm the downward turn already noted for average collectively agreed pay.

When compared with the data for collectively agreed pay increases, the earnings figures help to iron out to some extent the distortions caused by, for example, the fact that the relevant collective agreements in some countries provide only for minima. Increases in earnings are thus appreciably higher than agreed pay increases in Denmark, Finland, Greece, Ireland, Portugal Sweden and the UK (though lower in countries such as Germany). Overall, the average increases in earnings are greater than agreed pay increases.

Taking only the countries of the euro-zone (and those for which figures are available), the average increase in earnings, at 4.4%, was 0.1 percentage point higher than in the whole group of EU/EEA countries in 2001. The position was reversed in 2002, when the euro-zone average was 3.8% and the EU/EEA average 4.1% (though the average for 2002 is based on a smaller number of countries).

Data are available for three candidate countries - Hungary, Poland and Slovakia. In 2001, all saw increases in average earnings (averaging over 11%) which were very much higher than the average for the EU and Norway - with the figure for Hungary standing as high as 17.9%. In 2002, Hungary and Slovakia saw a further rise in the rate of increase, but the figure in Poland dropped dramatically to 1.7% (the average figure for the three countries thus dropped below 10%).

Figure 6. Increases in average earnings, 2001 and 2002 (%)

* Average of 18 countries for 2001 and average of 16 countries for 2002; ** Average of 15 countries for 2001 and average of 13 countries for 2002

Source: EIRO.

The figures in figure 6 should be read in conjunction with the following notes.

Belgium: figures cover blue-collar workers only (equivalent figures for white-collar workers were 3.2% in 2001 and 2.9% in 2002); figures represent total of collectively agreed pay increases (1.3% in 2001 and 1.5% in 2002), plus automatic pay indexation and effects of reduction of working time; figures, from Ministry of Labour and Employment, are for years to September.

Denmark: figures from Ministry of Finance.

Finland: figure from Statistics Finland.

France: figures represents the annual change in basic monthly pay for all private sector employees (according to the ACEMO survey); the 2002 figure is for the year to September.

Hungary: figures from Central Statistical Office; 2002 figure is for January to October.

Ireland: figures, from the Central Statistical Office, refer to average weekly industrial earnings; 2002 figure is for year to September.

Italy: figures from national accounts; 2002 figure is for year to third quarter.

Luxembourg: the 2001 figure is calculated as half of the 3.5% increase recorded over the two-year period 2000-1, plus automatic pay indexation of 2.5%; the 2002 figure is an estimate and also includes automatic pay indexation of 2.5%.

Poland: figures, from the Central Statistical Office (GUS), refer to increases in average pay in the national economy; 2002 figure for year to end of third quarter.

Portugal: figure from Banco de Portugal.

Slovakia: 2001 figure from Ministry of Labour, Social Affairs and Family; 2002 figure is forecast from Slovak Statistical Office

Spain: figures, from National Statistical Institute (INE), refer to the increase in monthly wage costs per worker; the 2002 figure is for the year to the third quarter.

Sweden: figures from Swedish Mediation Institute; 2001 figure relates to January 2000 to January 2001; 2002 figure refers to January 2001 to January 2002.

UK: figures from Office for National Statistics; 2002 figure is provisional and refers to the 12 months to September 2002.

Minimum wages

Twelve of the 19 countries considered have a national minimum wage, set either by law or by a national intersectoral agreement. Figure 7 below provides data on the increases in the minimum wage in 2001 and 2002 for these countries. These minimum wages are generally increased through some kind of indexation mechanism, plus in some countries through political decisions.

Taking the nine EU Member States concerned, minimum wage increases ranged from 10.8% (the UK) to 2.0% (Belgium and Spain) in 2001, and from 6.4% (Ireland) to 2.0% (Belgium and Spain) in 2002. The overall average rate of increase fell appreciably from 4.9% in 2001 to 3.5% in 2001 (the average was 2.8% in 2000, 2.9% in 1999 and 2.6% in 1998). The average increase in minimum wages was thus higher than the average increase in collectively agreed wages in 2001, by 1.1 percentage points, but at the same level in 2002. At national level, increases in the minimum wage lagged behind the average collectively agreed increases in pay in 2001 in Ireland and the Netherlands, and - more notably - in Belgium and Spain, while they exceeded the agreed increase in France, Luxembourg, Portugal and (very notably the UK). In 2002, the increase in the minimum wages lagged behind average increases in Belgium (notably), Luxembourg and Spain (notably) and exceeded them in Ireland, the Netherlands, Portugal and the UK (the two increases were identical in both years in Greece).

The three candidate countries considered all have a national minimum wage. The Hungarian minimum wage was more than doubled in 2001 and increased by a further 40% in 2002. The Slovak minimum wage was increased by over 11% in both years, while the Polish minimum wage, following a substantial rise in 2001, was frozen in 2002. The generally high increases - and the massive ones in Hungary - mean that the average for all countries considered is more than doubled when the three candidate countries are added.

Figure 7. Increase in national minimum wage, 2001 and 2002 (%)

* Average of 12 countries; ** Average of 9 countries

Source: EIRO.

The statistics in figure 7 should be read in conjunction with the following notes.

France: increases applied from July each year; increases given refer to hourly minimum wage (see FR0207105F for explanation).

Greece: figures refer to increases in minimum rates as set out in 2000-1 and 2002-3 National General Collective Agreements.

Hungary: 2001 increase awarded from 1 January; 2002 figure includes a 25% increase awarded on 1 January and a 15.9% increase awarded on 1 September (latter increase refers to rise in net minimum wage due to income tax changes).

Ireland: 2001 increase in national minimum wage applied from July 2001 and 2002 increase from October 2002.

Luxembourg; the 2001 figure includes a 3.1% increase awarded by law in January 2001, plus an automatic indexation increase of 2.5% awarded in April 2001; the 2002 figure includes only an automatic indexation increase awarded in June 2002;

Netherlands: the 2001 figure includes a 1.93% increase awarded on 1 January and a 2.25% increase awarded on 1 July; the 2002 figure includes a 2.22% increase awarded on 1 January and a 2.09% increase awarded on 1 July.

Portugal: increases were applied by law in December of each year.

Slovakia: increases awarded in October of each year.

Spain: increases were applied by law in January of each year.

UK: figures refer to adult hourly rate; increases awarded in October of each year

Gender pay differentials

The explicit pay terms of the collective agreements and minimum wage laws considered above are gender neutral - they do not provide for differing pay rates or increases for women and for men (to do so would, of course, breach EU and national equal pay law). However, the fact remains that women in all the countries covered here earn, on average, less than men. Figure 8 below indicates this gender pay gap by showing women's average pay as a percentage of men's.

The gender wage gap is widest in Austria (at 33%) and narrowest in Luxembourg (at 11%), averaging 19.2% across the EU and Norway - a slight reduction from the 20.4% found in our 2001 review of the data. However, year on year upward and downward variations seem to be a feature of gender pay statistics, and the fall is unlikely to be significant over such a short period. Where individual country data are available for several years over 1999-2002, these show small increases (eg France, Slovakia and the UK) or decreases (eg Denmark) in the gender pay gap, which are likely to arise for a variety of reasons. For example, in the UK the gender pay gap widened slightly between 2001 and 2002 from 18.5% to 18.9%, because of disproportionate wage increases for higher-paid employees, more of whom are men. Furthermore, some variations in the figures from those appearing in the EIRO pay update for 2001 (TN0202102U) are explained by changes in the source/nature of the data used (as with France).

When the three candidate countries are added, the average gender pay gap remains unchanged at 19.2%. The gap in Poland is well below average, while that in Hungary is around the norm and that in Slovakia well below average.

While the above figures provide a broad picture of the situation, the differences in calculation methods between countries highlighted in the notes below should be noted. The considerable problems in compiling and comparing gender pay statistics are examined in a 2001 EIRO comparative study - TN0201101S (Mark Carley, SPIRE Associates).

The figures in figure 8 should be read in conjunction with the following notes.

Austria: figure from Lower Austria Chamber of Labour.

Belgium: figure, from Ministry of Labour and Employment, refers to the private sector and to full-time workers - equivalent figure for private sector part-timers was 99.8%, and equivalent figures for the public sector were 92.6% for full-timers and 87.6% for part-timers.

Denmark: figure, from Statistics Denmark, refers to private sector - equivalent figure for state sector was 90.9%; the value of pension and holiday payments are included in the figures used for the calculation of the percentage.

Luxembourg: figure from Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques/International Networks for Studies in Technology, Environment, Alternatives, Development (CEPS/INSTEAD).

Netherlands: figure is estimate based on various sources.

Norway: figure is average for full-time employees in most sectors; figure based on wage statistics from Statistics Norway, and differs from earlier figures for the gender pay gap, based on living conditions surveys.

Poland: figure from Central Statistical Office (GUS).

Portugal: figure from DETEFP.

Slovakia: figure from Slovak Statistical Office wage structure data.

Spain: figure, from National Institute of Statistics (Instituto Nacional de Estadística, INE) pay survey, refers to average hourly earnings (including overtime) as percentage of total pay.

Sweden: figure, from Sweden Statistics, refers to monthly pay.

UK: figure, from Office for National Statistics (ONS) new earnings survey; refers to average hourly earnings excluding overtime of full-time employees on adult rates, all industries (the figure used in the 2001 EIRO update was based on gross earnings, which can distort the gender pay gap because men work much more overtime); the slight widening of the pay gap between 2001 and 2002 is explained by disproportionate increases for higher-paid employees, more of whom are men.